26 July 2005

Heavy-duty natural gas powered vehicles (NGVs) in 2010 that meet strict emissions standards will be comparable in owner lifecycle costs (LCC—to own, operate and maintain) to equivalent diesel-powered vehicles when the price of crude oil is between $22 per barrel and $31 per barrel (2010 prices), depending upon the vehicle and application.

At $60/barrel (in 2005 dollars) NGVs will have an advantage over their diesel counterparts in the three applications examined in the report (refuse hauler, transit bus, and short haul heavy-duty truck).

Those findings—even the findings of comparability—are significant, as NGVs are generally considered more costly due to low production volumes and relatively expensive on-board fuel storage system. The rising cost of advanced emissions control technologies required for 2010 diesel emissions standards and the rising cost of the fuel are whittling that advantage away.

Oil prices (not surprisingly) emerged as the variable with the largest impact on life cycle cost. The TIAX model projects that various categories of NGVs will become less expensive to buy, operate, and maintain than comparable diesel vehicles at varying oil prices: a refuse hauler at $22 a barrel, a short-haul truck at $28 per barrel, and transit bus operations when oil price reaches $31 per barrel.

There is a caveat on fuel economy. TIAX’s model shows that as fuel economy improves a trend emerges that favors diesel. Fleet applications with higher fuel economy (i.e., where fuel represents a smaller percentage of the annual operating budget) are less attractive for NGVs. Additionally, long-distance applications are less attractive, because of the increased cost of additional natural gas fuel storage. As they say, more study is required.

...At oil prices above $31 per barrel, natural gas technologies are cheaper than the diesel alternatives and may well be the best overall option for fleet managers.

—Mike Jackson, Senior Director, TIAX

TIAX prepared the report for the California Natural Gas Vehicle Partnership, the California South Coast Air Quality Management District, and Southern California Gas.

The study is based on a life-cycle cost model that incorporates expected vehicle, fuel, operational and maintenance costs during a vehicle’s lifetime, and then varied several factors independently. Among them were the cost of crude oil per barrel, the choice of diesel exhaust gas aftertreatment systems, the price of natural gas versus diesel, the price of liquefied natural gas versus compressed natural gas, engine costs and fuel economy.